Do we really need to behave like lemmings?

Economists are growing increasingly pessimistic about the prospects of growth for the global economy. Productivity is falling, inequality in income is growing and there is a fall in investment globally. " As income is redistributed from labour to capital, it flows from those who have a higher marginal propensity to spend to those who have a higher marginal propensity to save," writes Professor Roubini. Which means, people who earn less tend to spend a higher proportion of their income while rich people tend to save more. " Moreover, a protracted cyclical slump can lead to lower trend growth. Economists call this 'hysteresis': Long-term unemployment erodes workers' skills and human capital; and, because innovation is embedded in new capital goods, low investment leads to permanently lower productivity growth." Which means that new investment has a much higher component of automation, reducing the need for human labor. Some very rich people met in California this week to discuss how robots are taking over jobs. Bankers with PhDs and MBAs are being replaced by computers. As unemployment rises a large pool of educated workers competing for fewer jobs puts downward pressure on wages, which have remained stagnant for decades. The last 250 years has seen an enormous amount of growth compressed into a relatively short period of time so some adjustment is natural. However, if wages remain stagnant workers are reluctant to increase productivity and zero interest rates allow the wealthy to earn profits without creating jobs. This is shown by weakness of global manufacturing activity and where it is growing strongly, as in Italy and Germany, it is because of deep discounts. The Eurozone grew by 0.6% in the first 3 months of the year but inflation will remain at around 0.2%, reflecting a lack of demand, and rising debt remains a serious concern for Greece, Spain, Italy and even France. With no solution to the migration crisis some think that another Euro crisis is almost inevitable. Poverty is rising in Japan where unemployment is low, crime is low and irresponsible behavior, such as drug addiction and single parent families, is low. The most probable reasons are low productivity and competition from low wage countries. Central banks have resorted to zero interest rates, in some cases negative rates, and quantitative easing in the hope that cheap money will encourage spending and new investment. Wistful articles about looking for a new paradigm sound like desperation. The mortal drought in India and the wildfires in Canada are a warning that global warming is going to impact global growth adversely. This maybe what Thomas Malthus foresaw 250 years ago, only the details are different. We need to reduce human population drastically. Or perish, like lemmings.